What I’m about to show you is probably one of the worst kept secrets in the investing world. Yet virtually all investors fail to use it. Why? For some, it’s because it’s too difficult to implement, for others it’s too boring… but for the vast majority, it’s simply because of ignorance. They’ve most certainly heard of it but don’t know how to use it properly… and therefore leave millions of dollars on the table over their investing lifetimes.
And although it may be the most overlooked investing strategy, it is also the greatest investing strategy ever devised (and I don’t say that lightly. In just a moment you’ll see exactly why it really is the greatest).
But before I tell you what it is, let’s take a quick journey over to the town of Stanley, North Dakota, population: 1600, where a 74-year-old farmer named Herb Geving is living the good life.
For decades Geving worked hard, rising early and going to bed late… day after day after day.
His farm wasn’t worth all that much and anyone with a few hundred thousand dollars could have picked it up, or one similar to it.
But that all changed one day when huge oil reserves were found on his property and the little town of Stanley would never be the same again.
Today those reserves give Geving enormous cheques at the end of every month, and now his neighbours are looking to cash in too. You see…
That lowly farm is sitting in a region that
the U.S. Geological Survey says contains
between 3 and 4.3 billion barrels of oil…
The kicker: Hundreds of Stanley old-timers lived hard-scrabble lives for decades but missed the modern-day boom.
One long time resident said, “It’s kind of sad for them because they went through life and never got it. And now, it’s coming.”
And what do you suppose was the causes of their missed fortunes?
Well, it was Ignorance.
They didn’t know how much wealth they were sitting on and they didn’t have the information they needed to find out.
What’s Your “Town of Stanley?”
If you’re like most investors, then you could very well be like these farmers… rising early and going to bed late, working hard for your money, spending time doing things you don’t like to do, pushing yourself harder, harder, harder… and all the while sitting on a colossal amount of potential wealth and not even knowing it.
It’s a shame to work 40 or more years so you can just scrape by in retirement, all the while not knowing you could have easily amassed a fortune by having your money working most efficiently for you night and day, 365 days a year, just by changing a few thing and finding the right information.
The fact is, you can unlock this hidden wealth and experience higher investment returns (so you can build your wealth more quickly) with less risk (so you can keep your wealth safer).
You don’t have to end up like those hard-scrabble farmers and you don’t have to wait until you’re 74-years old to enjoy the good life.
You see, I’ve created a powerful, easy-to-read digital book that reveals the overlooked secrets to doubling the market’s returns. In it you’ll discover…
How psychological biases rob you of millions (Chapter 2)…
Two crucial things you must do before you purchase even one share of stock, yet almost nobody does them correctly (Chapter 6)…
The best investment resource you have available to you right now – bar none (see what it is in Chapter 7)…
Why listening to the “experts” can actually hurt your investment returns (discover why in Chapter 9)…
How to use your computer to instantly remove emotions from your investment decisions…
The 7 questions that can be worth literally millions of dollars to your portfolio (find out what they are in Chapter 10)…
What to do if you want to spend just 20 minutes a YEAR managing your investments but still safely make lots of money (Chapter 5)…
How to set up your portfolio to best take advantage of market volatility (Chapter 13)…
A little-known way to diversify more than just your stocks (you’ll learn about it in Chapter 12)…
An almost unknown way to increase the number of shares you own…without adding extra money to your portfolio or reinvesting dividends! (Chapter 12)…
How to find solid, high-quality stocks (explained in easy-to-follow, step-by-step detail in Chapter 10)…
A secret trick (even a novice investor can use) to almost instantly create the correct asset allocations (it’s spelled out for you in Chapter 13)…
How Warren Buffett evaluates a company before he invests in it (Chapter 10)…
Why money is not the #1 resource you need to invest successfully (discover what is #1 in Chapter 7)…
Why you should never invest in most Mutual Funds (Chapter 9)…
How to determine if a company has a wide economic moat (includes the complete step-by-step algorithm in Chapter 10)…
Three dirty little secrets most mutual fund companies hope you never find out (this alone is worth substantially more than the price of the Pragmatic Investor digital book. Discover why in Chapter 9)…
7 deadly investing mistakes most people make and how to avoid them (read about them in Chapter 15)…
What you need to do right now to drastically reduce your risk and stop losing money (Chapter 13)…
How to overcome the single most difficult aspect of investing successfully (you’ll find it in Chapter 5)…
How to get more returns with less risk! (You’ll be amazed when you learn this in Chapter 13)…
Advice many financial planners give you that is absolutely wrong! (You’ll find out what it is in Chapter 9)…
How to decrease your risk in the market by investing in riskier stocks (Chapter 13)…
Why your broker is not on your side and what to do about it (Chapter 9)…
The single best investment you can make, it’s not what you think (Chapter 7)…
And what’s more…
… here are just a few of the other things you’ll discover in the Pragmatic Investor
digital book:
- Why the majority of mutual funds will under-perform the market this year (will yours be one of them? Find out in Chapter 9)…
- Why Mutual Funds choose bad stocks (Chapter 9)…
- How to get an “investing edge” most financial advisors won’t tell you about (it’s all explained in Chapter 4)…
How Wall Street is ripping you off right under your nose! (Chapters 4 and 9).
… and much more.
These are the strategies that separate the men from the boys (and the women from the girls) in investing.
Proof That Doubling the Market’s Return
is Not Only Possible, But Probable…
In a world of Get-Rich-Quick schemes touting Options and Forex trading robots that will make you millions overnight, a promise of merely doubling the market’s return sounds kind of ho-hum.
Most of the other guys are promising 1000%, 2000% or more.
And since you know you can’t believe their big promises, why should you believe my more modest promise?
The answer to that lies in the work and results of none other than Warren Buffett.
Using a Value Investing strategy, Buffett has outperformed the market by returning an average of 29.5% annually compared to the market’s annual return of 7.4% from 1957 to 1969.
But, incredibly, that’s not the end of the story. Buffett’s Berkshire Hathaway has returned an annualized compounded rate of 24.88% for the 40 year period from 1967 to 2007 while the S&P 500 has returned just 7.79%.
In other words, Buffett has more than tripled the market’s returns consistently for 40 years!
A $1,000 investment in Berkshire back in 1967 would be worth $7,239,617.18 in 2007, while that same $1,000 investment in the S&P 500 would be worth just $20,097.35.
But it’s not only Buffett, Walter Schloss outperformed the S&P 500 by two and a half times (returning an average 21.3% annually compared to the S&P’s 8.4% over a 28 year period).
Tom Knapp of Tweedy Browne outperformed almost three times (returning an average of 20% annually versus the S&P 500′s 7% over a 15 year period).
Bill Ruane’s Sequoia fund returned an average 18.2% annually over 14 years while the S&P 500 came in at 10% over that same timeframe.
And the list goes on and on…
Charlie Munger (Buffett’s partner in Berkshire Hathaway) beat the market with an average annual return of 19.8% versus 5% for 13 years running and…
Rich Guerin crushed the S&P 500 returning a 19 year average annual compounded rate of 32.9% compared to the S&P’s 7.8% over that same time. That’s over 4 times the market’s annual returns over 19 years.
And do you know the one thing these investors all had in common…
They All Used Benjamin Graham’s
Value Investing Strategies…
… which are the same strategies on which the Pragmatic Investor is based.
As Buffett talks about these super-investors in his piece, The Superinvestors of Graham-and-Doddsville, he says, “So there are [the] records from Graham-and-Doddsville. I haven’t selected them with hindsight from among thousands… I selected these men years ago based upon their framework for investment decision-making.”
He also goes on to say, “It’s very important to understand that this group has assumed far less risk than average.”
Plus it make sense because…
Buying undervalued, high-quality businesses is the most certain way to make a fortune…
What Warren Buffett and a lot of other billionaires know that have made them fabulously wealthy is that the price of a stock doesn’t always have a whole lot to do with how much that business is actually worth.
To put it another way: To get rich you have to learn how to look beyond stock price and at a business’s value and if you get it right, you are, in Buffett’s words, “certain to make money.”
The big secret to acheiving market-beating returns is to make sure the value of the business is substantially greater than the price you are paying for it.
If you get this right, you can’t help but get rich.
Most investors make the mistake of thinking the price they paid has some necessary connection to the value of the stock they purchased.
Nothing could be further from the truth!
In Buffett’s words, “the price you pay determines your return.” The lower the price, the higher your return. The higher the price, the lower your return.
Buy enough high-quality businesses at low enough prices over the years and you can’t help but beat the market by 100% or more.
The big problem, of course, is that the vast majority of investors don’t know how to determine the value of a business…
and so they do the only thing they know how to do… look at the price and equate it with value.
But that’s wrong! Price is NOT the same as value.
And when you truly understand that, you can’t help but double (or even triple) the market’s returns.
“But does doubling the market’s returns
really make that much difference?”
Let me give you an example of why maximizing your returns can make a massive difference to how much money you make, and how much sooner you can retire or achieve your other goals…
Please pay close attention here, because I’m going to show you something truly remarkable…
Let’s say your annualized return investing in the S&P 500 over 20 years is about 13% (which it would have been if you had invested from January 3, 1989 to January 3, 2009).
That means $10,000 invested in January 1989 would be worth $115,230.88 in January 2009…
Let’s also say that by selecting solid, undervalued stocks coupled with concentrated diversification and asset allocation strategies, you can outperform that return by 5% (i.e. 18% annualized)…
Your total return for a $10,000 investment would then be $273,930.35. That’s a difference of $158,699.47.
Are you with me so far? Good. Now, watch this…
Let’s say you could double the market’s annualized return and get 26% a year (which is quite doable as you’ve just seen).
Your annualized returns doubled in this example, but would your portfolio value double? No, it would do much better than that!…
Your $10,000 would turn into $1,017,210.66 over the SAME period of time. That’s a difference of over 900 THOUSAND dollars directly in your pocket.
In other words, your annualized return has doubled (from 13% to 26%) but your portfolio value has increased almost NINE TIMES, from $115,230.88 to $1,017,210.66!
In fact, take a look at the table below, to see how, in this example, your portfolio value could potentially grow much more quickly the longer you invest:
For a $10,000 initial investment:
Annualized Return 13% 18% 26%
10 Years Invested $33,945.67 $52,338.36 $100,856.86
15 Years Invested $62,542.70 $119,737.48 $320,300.91
20 Years Invested $115,230.88 $273,930.35 $1,017,210.66
25 Years Invested $212,305.42 $626,686.27 $3,230,454.50
30 Years Invested $391,158.98 $1,433,706.38 $10,259,267.49
That’s the power of compounding!
Now, these figures are for example purposes only, but the point is, all other things being equal, just increasing your annualized return from 13% to 18% more than doubles your portfolio value… and going from 13% to 26% results in a staggering 8.8 times more money (from $115,230.88 to $1,017,210.66) over 20 years…
In other words, even a small increase in your annual returns can have a much bigger impact on your portfolio’s value over time — and bigger increases can make you millions!
But there’s one other thing you need to know…
Buying undervalued companies is just half the answer. The other half is knowing whether the company is a high-quality diamond or a rusted-out junker.
You might be able to buy a junker for a very low price, but would you want to?
Probably not.
High-quality companies let you sleep well at night because you know they will be there day after day cranking out oodles of cash in a very consistent fashion.
Junky companies keep you up worrying whether they will still be in business tomorrow or whether their competition will chew them up and spit them out.
That’s why you need to limit your investments to only the best of the best.
And when you do that, you get the best of both worlds: a substantial Margin of Safety AND a high-quality cash machine company that is usually the one doing the chewing up and spitting out.
So then, how can you find the diamonds and then check to see if they’re good buys?
Well, I’ve tested over 133 different investing and trading strategies since 1989, but let me share with you what has had the biggest impact on my personal investment portfolio, and how this can have a massive impact on your investments too…
My first experience investing in the
stock market was a real eye-opener…
I first started investing in stocks back in 1989 using a technique many people still use today: acting on a hot tip from an acquaintance.
Long story short: I lost all of my money in a very speculative stock that was supposed to go through the roof.
However, I did learn a very valuable lesson, which was simply this: do your own due diligence!
Since then I have had the good fortune (if you can call it that) to invest in all types of markets. Markets that went nowhere, hyper-Bull markets (remember the Internet bubble) and now, the worst Bear market since the Great Depression.
And I’ve learned quite a bit during those times. Not just theory, but real, time-tested strategies that made me real money in even the worst conditions.
In fact, I’ve used the very same principles and strategies revealed in the Pragmatic Investor digital book to increase my personal portfolio value by over 77% from September 2008 to August 2009 (and this was at a time when many lost 20 or 30% or more during that same period).
You see, everything I’ve learned in 20 years of investing and developing investment software, software currently used by thousands of people around the world, is now distilled and explained in plain, straight-forward English.
And it’s based on the same principles and value techniques that Buffett and his colleagues used to consistently beat the market. Plus it’s very easy to understand and use.
The strategy also includes a unique and powerful trading algorithm that intensifies returns by ensuring that short-term volatility works for you, not against you.
It also effectively shields your portfolio from the risks inherent in today’s volatile markets.
In essence, the strategy allows you to select only the safest, best-valued stocks that have a built-in margin of safety and then manages them with a proven trading technique in order to maximize returns and minimize risks.
Extensive backtests have shown that this system can more than double the market’s annualized returns while reducing risk!
But before I continue, let me ask you…
Do you know why I invest my own money
using these strategies?
…because they work.
And I’ve backtested them over so many different time periods and market conditions that it would make your head spin.
Now testing correctly is very important, but did you know that most investing systems aren’t properly tested?
That’s why my 20 years of research and experience was worth the effort.
During that time I have discovered what I believe to be a robust, properly tested system that uses the Internet’s ability to deliver accurate financial data to create an easy-to-use investing system that anyone, from beginners to experienced investors, can learn in just a few hours.
But that’s not all. I took my testing one step further and used an advanced method called…
Walk Forward Testing…
Once I had established the basic tests, I used 5 year windows of observation and tested the system by moving the evaluation period ahead by one year at a time and testing for a period 5 years forward from that new point.
I repeated this process until I arrived at the current date. Furthermore, I used walk-forward-testing to test all one-year windows over long periods of time.
I also tested the system on different groups of stocks using the walk forward technique.
The reason for going to these extreme lengths is very simple. When you or I decide that we are going to invest using a particular system, it might be this month, later this year or two years from now.
Most investors will have a different starting point and will feel most comfortable investing in different kinds of stocks.
Therefore we need to establish that the results achieved are not based upon fixed starting points or only work with stocks in certain industries, but that the investing system will be near equally profitable no matter when implemented and on which sectors and industries.
This type of exhaustive testing is rare because it immediately uncovers the flaws of a poorly designed strategy.
That’s why almost nobody does it.
But that’s exactly why you should not invest your money using a system that doesn’t pass this kind of rigorous testing.
So how does the system work?
It’s simple really (and it’s based on strategies that were developed and used by some of the brightest investment minds to ever walk the planet).
I simply found the best of the best, put them together in the right way, added a few of my own discoveries and tested the daylights out of them.
Here is what it does…
Minimizes the risk of each individual security by ensuring it is of the highest quality and has a strong, wide economic moat. You can lock in huge profit potential buying in when these stocks temporarily sag.
Finds solid stocks that have the greatest potential to increase in price because they are currently undervalued and contain a built-in margin of safety. You’ll always know precisely when you should be buying and when you should be selling.
Further minimizes risk and increases returns at the portfolio level by effectively using concentrated diversification, asset allocation and rebalancing techniques based on statistically proven low-correlation research. Remember, amateurs look only at profits while successful investors look at both risk and profits.
Actively manages your portfolio using a proven trading algorithm designed to take advantage of the market’s short-term volatility. You’ll never again get caught wondering what to do when the markets are turbulent.
“Is doubling the market’s returns
each year really possible?”
As I’ll show you in the book, truly astounding returns can easily be possible, but only when you understand all of the components of investing.
A profitable investing system doesn’t just chase returns, but must also take into account Psychology, Emotions, Risk, Time, Goals, Plans and much, much more.
Most “investors” look at only one or two of these components and some don’t look at any!
And that’s exactly what you might be doing if your returns aren’t where you would like them to be…
So let’s take a look at the results you could have achieved using the strategies contained in the Pragmatic Investor book.
Since I live in Canada, I look for Canadian stocks, however the methods described in the book will work for stocks in any country — the U.S., Australia, England, Germany…
Following the Pragmatic Investor’s step-by-step Fundamentals rating system resulted in finding a group of Canadian banking stocks.
In 2009, Canadian banks were considered the best banks in the world. Suffice it to say, these are some of the finest blue-chip and fundamentally solid stocks in Canada (and the world).
They scored extremely well on the fundamentals ratings tests and all have strong economic moats (determined using the step-by-step moat rating system described in the book).
They were also severely undervalued in the latter part of 2008 and first quarter of 2009 (mainly because of a knee-jerk reaction many investors had to anything having to do with banks during that time).
But if you followed the step-by-step valuation system in the Pragmatic Investor book, you would have known exactly what price to pay in order to ensure a satisfactory Margin of Safety.
In addition, the Pragmatic Investor contains a powerful trading strategy for managing the volatility in your portfolio of fundamentally strong stocks. Using it with the five major Canadian banks (RY, TD, BMO, CM and BNS) resulted in some excellent returns.
So just how well did these stocks do when used with the Pragmatic Investor’s strategies compared to a simple Buy and Hold strategy and the S&P 500 returns?
The table below contains the annualized compounded returns for periods covering 13 years, 10 years, 7 years, 5 years, 3 years and 1 year.
Period Pragmatic Investor Return Buy and Hold Return S&P 500 Return
8/14/1996 to 8/14/2009 28.47% 14.51% 3.26%
8/14/1999 to 8/14/2009 24.55% 11.64% -2.75%
8/14/2002 to 8/14/2009 19.41% 11.45% 1.26%
8/14/2004 to 8/14/2009 20.81% 8.86% -1.17%
8/14/2006 to 8/14/2009 18.46% 2.66% -7.49%
8/14/2008 to 8/14/2009 70.54% 9.93% -22.34%
Table of Annualized Compounded Returns
As you can see, the Pragmatic Investor significantly outperformed the Buy and Hold strategy and the S&P 500 in every single period.
Note also that the recent one-year period, starting in August 2008, included the worst economic crisis since the Great Depression — and as a result, the stock market was extremely volatile (and the banks even more so).
The Pragmatic Investor was able to harness that extreme volatility and returned an astounding 70.54% compared to 9.93% for Buy and Hold and a loss of 22.34% for the S&P 500 (keep in mind this extreme market volatility was a once-in-a-generation event and probably won’t be repeated anytime soon, but it shows the power of the Pragmatic Investor strategy even in the most volatile market conditions).
In fact, $10,000 invested on August 14th, 1996 would have grown to $259,670.38 by August 14, 2009, using the Pragmatic Investor, compared to $58,205.55 with the Buy and Hold strategy and just $15,174.61 if you invested in the S&P 500.
That’s more than 4 times the Buy and Hold value and an extra $201,464.83 that would have been lost without the Pragmatic Investor.
But what’s amazing is it is 17 times more money than you would have had if you had invested in the S&P 500 index over the past 13 years.
It should be clear that not using the Pragmatic Investor to your advantage can be very costly indeed.
And the nice thing is that at no time was the Pragmatic Investor portfolio invested in anything but high-quality blue-chip companies.
“Who should read this digital book?”
Anyone who wants to beat the actively managed mutual funds — or wants to beat the major market indexes — should read this book:
It’s for the novice investor who wants to start out investing the right way.
It’s for the experienced investor who is tired of not knowing what to do when the markets are volatile.
And it’s for anyone who wants to increase their returns and minimize their risk in the stock market using proven, tried-and-true, tested strategies developed by some of the greatest investment minds in the world.
However, you might still be thinking…
“Why do I need to read this book?”
I’ll admit, many of the strategies in this book are available on the Internet and in investment books at your local bookstore.
So if you’d rather spend years finding, combining and testing these strategies to discover which ones are best and which ones work synergistically together, that’s fine — although you will probably spend hundreds of dollars on books and potentially lose hundreds of thousands (or millions) in lost returns over time.
Or you could just buy this digital book, save yourself years of time and lots of money, learn the same techniques, and also discover how to apply them in a straight-forward manner directly to your investments — it’s up to you.
Plus, there are things in the book that I developed myself and still other things that are not yet widely known in the investment world.
You see, many people attempt to invest using certain “strategies” without actually understanding how and why they work — and so they become ineffective, or actually have the opposite effect — resulting in lower annual returns.
However, with 20 years of investing experience under my belt and after speaking directly with scores of customers who purchased my investment software (and reading through literally thousands of emails), I have seen pretty much every investing and trading system out there.
And most of them are completely useless or don’t work consistently and only sell because they appeal to people’s greed with hollow promises of overnight riches.
Here’s what I can tell you with certainty: you can get very rich in the stock market, but it takes time.
You cannot get very rich overnight using any sound investment strategy (let’s face it, trying to get rich quickly means taking enormous risks which almost guarantee you will lose your shirt. It also delays the success you can achieve by investing correctly).
So not only will I share with you the most powerful and best investment techniques and reveal how to apply them to your investments, but I’ll also show you how and why they work, so you can use them with a full understanding of what you are doing.
Warning: Don’t read this book if…
This digital book is not for everyone.
Do not read it if you’re looking for a “silver bullet” you can use to get rich overnight. No such bullet exists.
I know lots of people succumb to marketing hype and greed and end up buying products with extraordinary claims that almost inevitably turn out to be full of hot air.
So let me be honest with you — neither myself nor this book can guarantee you specific results or annual returns. When you apply the system I’m about to share with you, your results and returns will naturally vary.
On the other hand, the strategies I’ll show you have made many people lots of money and is a system that can show you what you need to know in order to invest successfully.
It gives you the the main elements and techniques that go into creating a truly spectacular portfolio that, given time, can significantly outperform mutual funds and the market indexes.
So if you’re looking to get rich quickly in the stock market, then you’re out of luck here…
… but if you want someone to give you an honest, straightfoward “How To” guide to creating a truly powerful investment portfolio for you and your family, then this digital book is definitely for you.